If you turned 73 this year, the IRS expects a slice of your retirement account whether you need the money or not.
Required minimum distributions, or RMDs, force savers to withdraw a set amount from traditional IRAs and most 401(k)s once they hit a certain age.
Miss the deadline, and the penalty is steep: 25% of the amount you should have taken, dropping to 10% if you fix it quickly.
The rule exists because those accounts grew tax-deferred for decades.
But for retirees already stretching Social Security and a shrinking pension, a forced withdrawal can push them into a higher tax bracket or trigger higher Medicare premiums two years later.
The SECURE 2.0 Act pushed it to 73 for anyone born from 1951 through 1959, and to 75 for those born in 1960 or later.
Plenty of people still using the old number are shocked when a penalty letter arrives.
Divide your account balance as of December 31 of the prior year by a life expectancy factor the IRS publishes.
A $500,000 IRA at age 73 uses a factor of about 26.5, so the withdrawal lands near $18,868.
That amount gets added to your taxable income for the year, regardless of whether you spend it, reinvest it, or let it sit in a checking account.
The 25% excise tax applies to the shortfall.
If you catch the error and file a corrected return within a two-year window, the IRS can reduce it to 10%.
You still owe ordinary income tax on the withdrawal itself, so the total hit can climb fast.
If you're still working and your 401(k) is with your current employer, you may be able to delay RMDs from that specific plan until you actually retire.
That exception does not apply to IRAs, and it does not apply to old 401(k)s from previous jobs.
Roll those into an IRA and the delay disappears.
A few practical moves can soften the blow.
Consider a qualified charitable distribution, which lets you send up to $108,000 directly to charity in 2025 and count it toward your RMD without adding to taxable income.
Converting part of a traditional IRA to a Roth in low-income years shrinks future RMDs.
Holding off on claiming Social Security can also lower the combined income that determines how much of your benefits get taxed.
You generally must take your first RMD by April 1 of the year after you turn 73, but every year after that the money must come out by December 31.
Miss December and the penalty clock starts immediately.
Automating the withdrawal with your broker is one of the simplest ways to avoid the whole mess.
Brokers now report these distributions to the IRS, so there's no hiding.
If you inherited an IRA from someone who wasn't your spouse, different rules apply and the timelines are shorter.
A quick call to a tax professional before December beats a letter from the agency in March.
The takeaway is simple: turning 73 is now a financial deadline, not just a birthday.
Know your number, take it on time, and plan around the tax bill before it lands.
Final Thoughts
A little attention in November can save thousands in penalties and surprise Medicare surcharges down the road.